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ECCT releases 2019 Position Papers

RELEASE DATE: 21 November 2018
CONTACT: Claire Lin
Tel: 2740 0236 ext. 212

ECCT releases 2019 Position Papers

The European Chamber of Commerce Taiwan (ECCT) today released its 2019 Position Papers. Under the theme "Reaching Higher: Embracing 21 st Century Solutions", the papers call upon the government to create the best conditions for the economy to thrive in the modern 21 st century economy by aligning the regulatory system with international standards, updating outdated legislation and embracing the best technology and solutions to resolve difficult problems. At an ECCT Premium Event lunch held today, a copy of the chamber’s annual publication was officially handed over by ECCT Chairman Håkan Cervell to the Taiwan government, represented by Chen Mei-lin, Minister of the National Development Council (NDC). At the event the chairman also presented a summary of the main theme and overview. The publication includes separate submissions from 24 of the ECCT’s 30 industry and support committees and raises 148 issues, 93 from previous years and 55 new issues.

In his presentation to NDC Minister Chen and ECCT members at the launch, Chairman Cervell congratulated the government on making progress on 22% of the issues raised in the 2018 papers, noting that this was the highest level of progress in four years. One of the major issues resolved for the ECCT’s Better Living committee follows a decision by the NDC and the Ministry of the Interior (MOI) to change the number formats used on Alien Resident Certificate (ARC) and Alien Permanent Resident Certificate (APRC) identity cards.  The lack of compatibility of the format with that of ROC ID numbers has for years denied ARC/APRC holders access to many services, such as online commercial services. The issue has been listed in the Better Living committee's position paper since 2009. "The resolution of this issue comes after many years of advocacy by the ECCT and marks a significant step forward towards ensuring fair treatment of foreign nationals", Cervell said.

The chairman went on to say that the government has made great progress towards improving Taiwan's regulatory environment in recent years. As illustrated by the image of an apple tree on the cover of the position papers, where all of the low-hanging fruit has already been picked, Cervell explained that the government has solved most of the easy issues. However, Taiwan's regulatory environment is still not fully optimized to meet the needs of a modern economy. For example, many of Taiwan’s regulations are not aligned with international standards, are outdated or are not fit for the purposes of future development. If Taiwan is to succeed economically in the 21st century, it needs a modern and dynamic regulatory system that is appropriate for the 21 st century. Such a system needs to be fully aligned with international standards, be adaptable to changing technology and industry trends and be flexible enough to enable the development of new industry sectors. However, reaching the high-hanging fruit – the most advanced and appropriate solutions for Taiwan’s future development – will require a great deal more effort, he said.

In his presentation, Chairman Cervell highlighted the fact that Taiwan is facing multiple challenges. It has one of the world’s most rapidly-ageing populations. In addition, traditional industries are facing fierce global competition and disruptions to traditional
business models caused by technological advances. To deal with these and other challenges and to remain dynamic and competitive, the best solutions need to be adopted. If Taiwan is to continue to thrive, it needs to move up the value chain and develop the industry sectors that will thrive in the 21st century. The development of new industries requires an enabling regulatory environment that encourages innovation. To achieve success in the 21st century economy requires adopting 21st century solutions.

The overview of the papers recommends a number of solutions, which are summarised

International standards and best practices
The most enabling regulatory environment is one that is aligned with the best international standards and practices. While Taiwan has gradually moved towards adopting international standards, there are instances where local practices deviate so far
from the best international standards and practices that they make doing business very difficult. The overview lists the following examples, among others:

Transparency and consistency of government policies: The ECCT's Retail & Distribution committee has noted several instances of inconsistencies in the implementation of regulations and procedures for importing products into Taiwan.

Automotive standards: Numerous local safety regulations for automobiles require duplicate testing and paperwork. These requirements are unreasonable for complete vehicles and components which have already been certified in Europe. Meanwhile, key items in automotive testing are still not open to foreign laboratories.

Electrical Engineering and Equipment standards: Taiwan authorities require additional tests for Air Circuit Breakers (ACB) even if type tests refer to IEC standards. In addition, while Taiwan's versions of international IEC standards continue to evolve over
time, some local standards have remained unchanged since 2001.

Government procurement: Currently only two of Taiwan's six special municipalities (Taipei and Kaohsiung) are required to comply with the terms of the WTO's Agreement on Government Procurement (GPA). Subjecting the other four cities to the same rules would attract more bidders and raise the quality of public procurement projects.

The overview recommends resolving all of these issues by updating and aligning Taiwan's regulations with the best international standards and practices.

Appropriate regulations for the 21st century
The regulatory system needs to be frequently updated to take into account changes in technology and trends, such as automation and digitalisation. The following are some of the instances where Taiwan's regulations that are no longer fit for the purposes of the modern economy.

Certified e-mail with e-signatures: Producing international certificates to present to authorities in Taiwan is time-consuming and costly. The process could be made shorter and cheaper by enabling the use of electronic signatures.

Electronic filing of withholding taxes for foreign e-service providers: Currently, the filing of certain documents for withholding taxes can only be submitted in hard copy form, and in person or by post to tax bureaus. In line with the government’s move towards digitalisation, procedures should be able to be done online.

Digitalisation and streamlining of tax supporting documents: Original hard copies of supporting documents, such as airline boarding passes and samples of advertisements in newspapers and magazines to substantiate advertising fees, are still required by the Tax Administration. Authorities should accept digital versions of all documents.

Expanding the business scope of e-commerce for the insurance industry: The Financial Supervisory Commission has relaxed regulations and expanded the variety of insurance products that may be sold. However, the online application process is time- consuming and limited to certain types of life insurance products and sums assured. E- commerce procedures should be streamlined and the online registration and insurance policy purchase processes should be simplified.

Solutions for the green economy
Taiwan has the potential to develop its green economy-related sectors, not only as a means of increasing energy security and reducing greenhouse gases, but also as a source of new industrial development, job creation, technology and equipment exports.
However, authorities need to remove several bottlenecks in the regulatory environment to allow the green economy to thrive. The following is a list of a few of them.

Wind energy: Taiwan's wind energy sector has great potential but the government needs to assure the smooth buildout of the offshore wind farm projects it has approved. Developers need to be confident that grid connections will be built on time, that power transmissions will not be curtailed without compensation, that localization requirements will not compromise quality or safety, and that sufficient New Taiwan dollar financing will be made available for construction.

Electric vehicle infrastructure: Taiwan is following the international trend towards electrification of the transportation sector by announcing a timetable for all new vehicles to be electric before 2040. To realise this goal, advanced systems and infrastructure,
which take into account international standards for safety, improvements in battery technology and the need for appropriate and sufficient battery recharging infrastructure, need to be carefully planned and installed.

Circular economy waste to energy: The government has expressed support for the circular economy and its efforts to manage municipal waste and the implementation of resource recycling policies have already achieved great success. However, new ways
are needed to further reduce the amount of waste going to incinerators and landfills and handle waste in a circular manner by treating it as a raw material and energy resource.

Energy saving and sustainable building designs: Since buildings account for a large portion of energy usage, it makes sense to improve energy efficiency in buildings. However, Taiwan’s building codes are not strict enough.

Solutions for an ageing society﹕While there is no silver bullet to address Taiwan’s ageing society, there are several practical measures that can be taken to streamline existing procedures and help to alleviate the magnitude of the burden. Prevention is better than cure: Keeping people healthier for longer reduces the burden on the healthcare system. More of the National Health Insurance budget should be allocated to health promotion and prevention, such as health education programmes and disease screening.

Faster review times for drugs and medical devices: The current pricing and reimbursement approval process remains lengthy for drugs and medical devices. The process needs to be streamlined and sped up to give patients access to the latest

Spreading the burden of healthcare costs: While Taiwan's healthcare system has received praise for its universal coverage ratio, cost-effectiveness and efficiency, the ageing population will place additional demands on the system. To spread the burden,
authorities would do well to loosen restrictions by allowing co-payments for more drugs and devices and approving more types of private health insurance products.

More creative solutions for increasing the pension pot: The lack of adequate provisions for retirement is a problem facing many countries globally. Authorities would do well to look at emulating examples from other countries that have been successful in
encouraging residents to set aside larger portions of their incomes for their pensions.

Solutions for attracting and retaining talent
The government has introduced legislation to attract talent to Taiwan that, while well- intentioned, is not fit for purpose. To attract and retain the talent needed for Taiwan's economic development, authorities would need to address the following issues:

Equality of treatment for foreign nationals: Taiwan is a good place for foreigners to live and work. However, there are still areas where foreign residents are treated differently from ROC nationals owing to the government's tendency to view matters through the lens of 'citizens versus foreigners' rather than making what would be a fairer distinction between legal residents of Taiwan (both citizens and foreign residents) and non-residents (visitors).

Further labour law reforms: While the government has taken positive steps to revise inflexible labour laws over the past year, more could be done to relax rules on working hours and conditions. Moreover, senior employees and managers should be exempted from the rules that apply to other employees.

Visa requirements for foreign professionals: The application process for both long- term and short-term work permits for foreign nationals needs to be made transparent, consistent and simple.

Foreign labour for the service sector: Restrictions on hiring unskilled labour for the service sector have led to critical labour shortages. Authorities should loosen restrictions to allow employers in the service sector to hire foreign labourers.

Protecting foreign labourers: For those industry sectors where foreign labour is already permitted, greater efforts are needed to protect vulnerable foreign workers.

Solutions for the English language environment
The cabinet has stated its interest to make English a second official language of Taiwan. The ECCT has welcomed this since improving English language proficiency in Taiwan would increase Taiwan's attractiveness to investors, entrepreneurs and talented individuals, which would help to boost the economy, create jobs and move Taiwan up
the value chain.

The government has already taken several steps to improve the English language environment. The Ministry of Education has already made several proposals, such as increasing English class hours at elementary, junior and senior-high schools, and establishing bilingual classes. Several ministries have also taken action to improve the
scope and level of English information and services.

Raising the level of English proficiency in Taiwan will take time and the coordinated efforts of the government across all ministries. Besides the Ministry of Education, which will focus on making the next generation fluent in English, ongoing adult education should not be neglected. A good place to start is to improve the level of English fluency of government officials at all levels through training and by offering incentives. In addition, a more coordinated effort is needed by the government to translate all legislation and make its websites bilingual by design. The ECCT recommends setting up a central translation resource centre to ensure consistency in translations across all ministries.

The overview concludes that the government has demonstrated a will to tackle difficult problems and made great progress in resolving some of the difficult issues facing business. The low-hanging fruit has been picked. Yet, just as the high-hanging fruit is the ripest and juiciest, the best solutions for the 21st century, while difficult to reach, promise the greatest benefits. Now, the difficult task ahead is to reach higher and embrace the best solutions – only the ripest and juiciest fruit – for Taiwan's future. Embracing and implementing these solutions, as set out in the ECCT position papers, would produce multiple benefits for the economy and ultimately lead to greater economic and social prosperity.

Open Door Mission to Brussels
Besides presenting the position papers to the Taiwan government, the ECCT will also use the papers as the basis for briefing the European Commission, the European Parliament and the European Council. To this end, an ECCT delegation comprising board directors, supervisors, committee chairpersons and staff will visit Brussels at the end of December for its annual "Open Door Mission", a series of meetings aimed at providing European officials with a comprehensive update on the current political, investment and regulatory environment in Taiwan.

About the ECCT
With over US$49 billion in direct foreign investments, Europeans remain the largest group of foreign investors in Taiwan. The European Chamber of Commerce Taiwan is the principal nationwide organisation promoting European business interests in Taiwan. The chamber represents over 900 members from over 400 companies and organisations. Through a network of 30 industry and support committees, the ECCT has been successful in addressing specific concerns and providing concrete recommendations to all levels of government to facilitate improving the business environment. The ECCT's annual position papers comprise issues identified by its committees as hindering the further development of their respective industries and provide recommendations to the government of Taiwan aimed at improving the business environment. They also serve to keep the European Commission and parliament as well as the governments of individual European Union member states informed about Taiwan’s business environment.